Politics & Government

With NC donation reports almost due, here’s your guide to political money

Vivian Connell, a Chapel Hill teacher, was featured in a television ad funded by The National Education Association Advocacy Fund that attacked Thom Tillis' record on education. The super PAC for the largest teachers union in the country launched the seven-figure TV and digital ad buy in Sept. 2014. The commercial aired in 95 percent of North Carolina for a week at a cost of $1.7 million.
Vivian Connell, a Chapel Hill teacher, was featured in a television ad funded by The National Education Association Advocacy Fund that attacked Thom Tillis' record on education. The super PAC for the largest teachers union in the country launched the seven-figure TV and digital ad buy in Sept. 2014. The commercial aired in 95 percent of North Carolina for a week at a cost of $1.7 million. Hagan for Senate

By the end of the week we’ll know more about how aggressively candidates in North Carolina have been chasing campaign money – and where they’re getting it. Friday is the state’s deadline for reporting 2015 campaign donations.

It was six years ago last week that the U.S. Supreme Court’s Citizens United ruling did much to change the fund-raising landscape. More money than ever is being poured into political races, including campaigns for North Carolina’s March 15 primary.

But the system is a mystery to many voters. Super PACs, issue ads, dark money – what do they mean?

Here’s some of what you need to know:

All those committees

First, there is the political committee. Such a committee is controlled by a candidate, a political party, a business entity, a labor union or a professional association, or it’s formed to support or oppose specific candidates.

In North Carolina, donors can give a political committee up to $5,100 per election cycle. Contributors’ names, addresses, occupations and employment information must be disclosed, unless they give no more than $50.

Then there is the political action committee, which represents special interests – commercial or ideological. A PAC can solicit up to $5,000 from any individual, another PAC or a party committee each calendar year. It can also give $5,000 to a candidate per election, and up to $15,000 annually to a national party committee.

And there is the super PAC. It can raise and spend unlimited amounts, but it can’t coordinate its activities with any candidates’ committee – making things more murky. Known more technically as an independent expenditure committee, the super PAC can’t give money directly or indirectly to candidates.

A refresher course

Here’s where a brief history lesson may be needed. Super PACs were created in a series of rulings by federal courts and the U.S. Supreme Court, and by evolving law.

▪ In 2000, federal law changed to allow unlimited money to be spent on issue advertising about specific candidates. These ads are typically negative, and they run right before an election.

▪ A reform law in 2002 required the disclosure of donors who pay for issue ads aired during a period around an election.

▪ In 2007, the Supreme Court said corporations and some types of nonprofit groups can spend money on issue ads – if they don’t overtly call for the election or defeat of specific candidates.

▪ Then, in 2010, the high court, in Citizens United v. FEC, said the restriction on independent political spending by corporations and unions was unconstitutional. That cleared the way for creation of committees that can raise and spend unlimited money from people, corporations, associations and unions, independent of what the candidates are doing: the super PAC. 

While super PACs have to disclose their donors, nonprofit groups do not. So Citizens United opened another channel: Now, super PACs can get money from nonprofits that have gathered the money from unidentified sources.

Webs of what is derisively called “dark money” now connect super PACs and nonprofits this way. In campaigns across the country, millions of dollars are rolling in from interests that the public cannot know about.

Dark money or free speech?

So there’s an argument over whether people and entities have a free-speech right to give money as they choose, or whether that process undermines democracy.

In North Carolina, conservative financier Art Pope has said he isn’t “buying an election” just because he contributes lots of political money. On the other hand, campaign watchdog Bob Hall of Democracy N.C. says this isn’t free speech – it’s “purchased speech.”

Another layer of all this is the social welfare nonprofit. Under the Internal Revenue Service tax code, groups formed to further the general welfare and common good don’t have to pay taxes. And they can engage in political activity, so long as politics isn’t their primary activity.

This has come to mean that they can’t spend more than half their money on politics.

But there is disagreement about what’s political and non-political activity.

Carolina Rising, a nonprofit promoting conservative ideas, spent nearly all its money on ads praising Republican Thom Tillis during his U.S. Senate challenge to Kay Hagan in 2014. The group argued that its ads were issue ads because they focused on education and autism, and mentioned Tillis only incidentally.

Dallas Woodhouse, former head of the state chapter of Americans for Prosperity and now executive director of the N.C. GOP, said he started Carolina Rising in 2014 to promote conservative ideas about education and free markets. It drew the attention of a national watchdog group, the Center for Public Integrity, which determined that Carolina Rising bought nearly 4,000 ads praising Tillis, and that most of the $5 million it raised came from a single, undisclosed source.

So what’s an issue ad? Or, as it’s also known, an “express advocacy political commercial”?

It comes down to whether the ad carries any of eight specific phrases: “Vote for,” “elect,” “support,” “cast your ballot for,” “Smith for Congress,” “vote against,” “defeat,” and “reject.” That comes from a 1976 Supreme Court case known as Buckley v. Valeo.

North Carolina does require candidates and committees to identify themselves in TV ads they sponsor; candidates must include a photograph of themselves. So voters can then do research on the sponsor if they want.

The Federal Election Commission says an ad is political if it mentions a candidate and airs during a specific time frame before an election. If it’s outside that window and none of the forbidden phrases is used, it’s an issue ad.

But the IRS looks at a broader picture, to surrounding facts and circumstances; it can consider ads political even if the FEC doesn’t.

The six-member FEC is deadlocked on resolving this issue, leaving campaigns to charge ahead this year without clear direction.

Money benefits both sides

Concerns over campaign finance, in general, aren’t just split along party lines.

The Center for Public Integrity reported last week that an environmental nonprofit group and a super PAC formed by a national nurses union are bolstering Democratic Sen. Bernie Sanders’ presidential campaign.

Hagan raised more than twice as much money as Tillis in that 2014 Senate race – $25 million to his $11 million. Another $82 million was spent on the race by outside groups, prompting Hagan to bitterly denounce the financing game. But that outside money benefited both candidates, making their contest the most expensive in the country that year.

One thing actually is clear: Allowing unlimited amounts of money from unknown donors, supposedly working independently of the campaigns, allows candidates to say they have no control over the often nasty TV ads that appear.

They can distance themselves from those mean messages, all the way to the bank.

Craig Jarvis: 919-829-4576, @CraigJ_NandO

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